Time to make a will.....so if I leave 80% of my total estate to charity, once everything has been turned into cash, and assuming it exceeds the Inheritance Tax threshold, would I pay tax at 36% on everything over £325k, or just pay 36% tax on 20% of my estate over £325k.
The 36% tax is if you leave 10% or more of the estate to charity.
Answers on the back of an envelope please, and no begging letters, although worthwhile charities can be brought to my attention!
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The tax applies on everything over £325k. So if your estate is say £425k, then the tax will be 36% of that i.e. £36k, assume you have left at least £42.5k to charity.
E&OE. Don't take my word for it, but that's my understanding.
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Thank you. That was my understanding also.
I now have a rough draft, and will finalise on my next day off. And I have just realised that my smallish private pension pot will also be taken into the equation, although I intend to make a dirty big hole in that this year!
Last minute ski trip just booked ( I should have splashed out on a 3 star) two big overseas trips and maybe a replacement for the BM.
Time for beer. That's a start anyway.
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Undrawn pension funds won't count for inheritance tax from April.
There are some Q&A here on the changes to treatment of undrawn pension money.
www.telegraph.co.uk/news/11127534/Pension-death-tax-your-questions-answered.html
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".......would I pay tax at 36% on everything over £325k........?"
Nope. You wouldn't pay a bean. You'd be dead. Your executors/beneficiaries would. :)
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I have never understood inheritance tax, paying tax on assets that one has already bought with taxed income. I aim to leave all my assets above the nil rate band to charity.
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Cash left to a registered charity is taken off the value of the estate.
Tax at 40% on value over the £325K
Example Estate of £500K (after funeral expenses etc) with £100K to charity leave £400K
£400K less £325K = £75K @ 40% = £30K IHT
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FB
surely should be calculated at 36% ? since more than 10% is gifted to charity.
or is Scotland different?
Last edited by: sherlock47 on Tue 3 Mar 15 at 22:22
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www.gov.uk/inheritance-tax-reduced-rate-calculator
tinyurl.com/nosfmx6 example to determine if reduced rate applies
Last edited by: sherlock47 on Tue 3 Mar 15 at 22:41
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>> I have never understood inheritance tax, paying tax on assets that one has already bought
>> with taxed income.
On which (viz real property) there has been a massive unearned gain.
And if you really want to mess with free market meritocratic heads:
A meritocracy shouldn't accrue advantage to inherited wealth. Therefore inheritances should be taxed at 100%.
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There is no real justification for inheritance tax beyond the fact that the country needs a certain amount of money to fund its chosen path and IT is one way of getting it.
Thus tax is gained wherever it can be. Since the wealthier (not just the rich) can afford more they are taxed more. And inheritance tax typically increases impact with wealth. until you get to the really rich, of course, and then its impact declines due to available resources, options and approaches.
Ultimately we choose to live in a society and it is part of the cost of that society.
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Well said Mark.
After dealing with my late mother-in-laws finances I've figured out a fair bit. And realised I might re-do my will. Or at least check some things with the solicitors.
And I think I am right in saying that the IT threshold is passed to a surviving spouse. Doesn't help LL (sorry to digress).... I still need to check if I need to do anything about that. House is worth over £300k with other investments taking it all over £325k for sure. But not £650k.
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>> A meritocracy shouldn't accrue advantage to inherited wealth. Therefore inheritances should be taxed at 100%.
>>
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But isn't inherited wealth, in terms of the material assets it represents, the capital on which the country's prosperity depends?
Why not smash everything up and let the next generation start off again from the stone age?
It was good enough for us - young people should make their own way in the world. :)
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>> A meritocracy shouldn't accrue advantage to inherited wealth. Therefore inheritances should be taxed at 100%.
>>
>>
Is that some of the famous irony again B??
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I don't have a problem with paying taxes, if we want to live in a civilised society (and I do) then we must pay for public services. Although as an aside I believe there needs to be a complete review of which services should be kept public and which could be outsourced. I particularly dislike IT since it is a disincentive to success, most of my wealth has come from business success, on which I have paid taxes and employed people, not to mention significant personal and financial risks I have taken over the years. My house has definitely increased in price, although some of that is due to improvements we have made (two extensions for example), with taxed income of course. The nil rate band should be increased to reflect house price increases, 325000 around here buys a three bed semi if you're lucky. Maybe Nick Clegg will sort the problems out. If I knew which day I was going to croak then I would blow the lot by the day before!
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>> I don't have a problem with paying taxes
Neither do I. However, I hate paying taxes twice!
IT is unfair on this ground. Some hardworking individual saved something after paying tax already. So, it is not right to tax it again!
Same goes for VAT and fuel duty. We pay income tax already. Then again all these taxes!
Some taxes e.g. TV license are totally unfair to start with.
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>> Some taxes e.g. TV license are totally unfair to start with.
>>
Depending on your viewpoint, you might think the TV license is about to become even more unfair - there are high level suggestions about replacing it with a "broadcast tax", which is applicable to all households, irrespective of whether they watch the BBC or not. Then a top up "subscription" as well according to what you want is mooted.
They have a "broadcast tax" like this in Germany, apparently, at the equivalent of £155 a year on all households if I recall correctly.
Here, or many other sources of course:
informitv.com/2015/03/01/television-licence-fee-under-threat/
Last edited by: Crankcase on Thu 5 Mar 15 at 10:51
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Inheritance tax will not bother my heirs. (Unless I win Euromillions).
Last edited by: Roger. on Thu 5 Mar 15 at 11:02
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It is, of course, possible to take out life insurance to offset IHT. The payout goes to the nominated next of kin; it does not form part of the deceased's (taxable) estate.
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>> It is, of course, possible to take out life insurance to offset IHT. The payout
>> goes to the nominated next of kin; it does not form part of the deceased's
>> (taxable) estate.
True. But the premiums might then count as gifts. OK if they fall in annual exemption (£3000?) but otherwise they might come into account unless the insured survives long enough for them to fall out of account.
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Inheritance Tax - Manatee
